Hawaii lawsuit targets Jones Act

Monday, December 03, 2012

A class action suit filed last Thursday against the federal government in U.S. District Court in Hawaii (Patrick Novak, et al v. U.S., CV12-638) is challenging the constitutionality of the Jones Act.
Enactment and enforcement of the Jones Act's restrictions to the State of Hawaii "results in unconscionable, inequitable harm and inflated prices to the residents and businesses of the State of Hawaii to such an extent that its application is an unlawful restaint of trade and interstate commerce, thereby violating the Commerce Clause of the United States Constitution, Article I, Section 8, Clause 3."
It asks the government "be permanently enjoined and restrained from, in any manner enforcing the provisions of the Jones Act as it relates to or otherwise impairs the State of Hawaii's equal access to U.S. interstate commerce with the States, Nations, and Indian Tribes."
The suit says the plaintiffs in the case have suffered financial loss caused by "the monopolistic environment" created by the federal government. The suit says ocean shipping to Hawaii is effectively a duopoly, controlled by Matson and Horizon Lines.
The suit was filed by John S. Carroll, a Honolulu-based attorney, who had filed a similar challenge against the Jones Act in 2009. That suit was dismissed, but Carroll said there are important differences.
In 2009 Carroll said "we got tossed on the issue of standing" with the court saying there was not a "direct or particularized connection between our claims and the Jones Act."
This time around, Carroll says his first plaintiff, Patrick Novak, the former CEO of a pastry dough manufacturer called "The French Gourmet," says the cost of shipping climbed by 70 percent. He said the cost of shipping a 40 foot refrigerated container from Hawaii to Dubai climbed from $4,000 to $11,500 per container.
Carrol said Novak's company went out of business because of issues "directly related to shipping cost."
Carroll, whose lawsuit uses the word "shipper" to refer to liner shipping companies, says the federal government "has emboldened Shippers to take actions that any fair-minded individual would deem as collusion and price fixing. From 1999 to April of 2008 Shippers increased their rates in lockste(p)."
A chart stretching over three pages claims to show identical fuel surcharges from Matson and Horizon between 1999 and 2008, and says they jumped between January 2007 and April 2008 from 17.5 percent to 33.75 percent.
The other half dozen named plaintiffs in the case are identified as farmers or ranchers, distributors or simply as residents -- including two college professors, one who teaches economics, another philosophy. Carroll says the Jones Act increases the cost of living in Hawaii by at least 30 percent.
Carroll, who said he is nearing 90, ran for the Republican nomination for the U.S. Senate this year in Hawaii and made opposition to the Jones Act one of the major issues in his campaign. He served four terms in the Hawaii House of Representatives and one term as a State Senator.
"I've been fighting this thing for 40 years and decided to win this one," he said. - Chris Dupin